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Oracle Ups The Ante - Does the Salesforce Empire Strike Back?

The fall conference season is in full
swing. Of the big 4 we had Oracle Open World and the SAP Hybris Summit, with
Dreamforce, SAPPHIRE, and Microsoft Connect() still to come.

I have covered the
SAP Hybris Summit, so do not need to say much about it anymore. The event
was short on great announcements – maybe they will come at SAPPHIRE – but
certainly contributed to showing the clear vision forward that SAP has.

And it is a compelling and consistent
vision.

OOW 17 was a different beast, most notably
with the announcement of Oracle 18c.

A year ago Oracle took Amazon full on,
declaring it enemy number 1. Many analysts, including myself, were confused
about this. Why Amazon and not Microsoft? After all Microsoft is the company
that has a very credible IaaS, PaaS, and SaaS. Add the operating system and
productivity software and you have a company with a formidable software stack
that can be on the winning side of a Clash of
Titans.

While CTO Larry Ellison still took pot
shots at Amazon in his keynotes, one can come to the conclusion that these are
a kind of diversion, and that Oracle is back in best Musashi style.

Oracle steps up its IaaS game

The AI driven automation of Oracle 18c is
game changing in the database play, and hence in IaaS.

The new container engines should bring
Oracle’s cloud on par with AWS and Azure.

All three, Microsoft, Salesforce, and SAP now
have something to chew upon.

SAP, because their databases are now
lacking a real important argument. And that has an impact. SAP, for example,
should feel more heat when it comes to HANA, the only database that is
supported for S/4.

Salesforce, being a big Oracle customer
itself should feel some pressure when it comes to who they partner with when
deciding about additional data centers. Faster and cheaper than AWS is a pretty
compelling argument.

Along with the full software stack and the
IaaS capabilities Microsoft is taken full on. After all Microsoft is Oracle’s
competition when it comes to business workloads.

Oracle has arrived in the Cloud world

It looks like Oracle’s Fusion project has
finally brought a suite of cloud native business applications. This means that
all big vendors now can concentrate on coercing their customers from an on
premise world into the cloud world – not that Salesforce needs to do that, but
you get the point. And with the claim that business applications run fastest
(and cheapest) in the Oracle cloud there is quite an interesting argument out
there.

This is less a problem for Microsoft and
SAP, as they have customers using their suites, which tends to be a good
defensive line.

However, it is a real problem for
Salesforce with a focus on the wider area of CRM, without own database
capabilities and with a low focus on IaaS.

Oracle has understood that AI in itself is not of value

Oracle now seems to consequently put the business
purpose of AI and machine learning into the foreground. AI in itself is
nothing. It is a tool that needs to be brought to a use. There are more and
more ‘prebuilt’ AI (and IoT) applications that are intended to deliver business
value. This gets emphasized by applying machine learning to the database itself
and to the security software. Add conversational capabilities to the software
and a story emerges.

Oracle has closed the gap to the
competition in this area and is at least ahead of SAP in the conversational
department. SAP still relies on partnerships although it has the technology in
place.

Now, what does this mean for Salesforce?

Last year’s big thing was Einstein, which
was a clear statement about the importance of transparently embedding AI into
business applications. Salesforce being a company that time and again proved
that it is able to set the pace for the whole industry, it can be expected that
there will be some relevant announcements.

And there need to be, because Salesforce is
in a tight spot. Probably for the first time in its history.

·The platform needs a renewal

·The company does not have the
infrastructure capabilities that the competition has. Here clearly Microsoft
and Oracle have the edge.

·Salesforce depends on Oracle’s
database, which means subsidizing the competition. On top of this Oracle just
announced that Salesforce applications will not run on their best performance,
as they are not running on Oracle hardware (AWS is not using Oracle HW, as far
as I know).

·At the core Salesforce is a CRM
company. This leaves a lot of important processes out of scope. And, being a
CRM guy myself, I’d argue that it is far simpler to replace a CRM system than
an ERP system.

·With its focus on CRM a lot of
the data that is necessary for well running, AI driven IoT applications is
missing. I’d say that SAP has the lead here with a staggering 76 per cent of
all transactions touching SAP systems. Salesforce is comparatively week in
first party data management.

·Salesforce lost out on LinkedIn,
didn’t
pull through with Twitter (the price was agreeable too high), and now
additionally got put on the back foot with SAP
acquiring Gigya. This seriously limits their profiling and therefore
recommendation capabilities.

·The company buys growth on the
expense of profitability. Sooner or later investors will not accept this
anymore.

A Way Forward

In my eyes, Salesforce’s biggest strength is
the ecosystem, which the company probably let erode somewhat. At least I heard
a few statements of Salesforce software partners that Salesforce doesn’t really
seem to care anymore. If the same company then says that it is easier to deal
with SAP that is telling.

There also could be some partnership
announcements around strengthening industry solutions, also to cover the
challenge described next.

Supporting this, there should need some
strong moves in the platform area. The big 4, as well as some other companies,
are striving to become the fabric that permeates a business, and connects it to
its suppliers and customers. Salesforce is strong on the customer side only,
which opens up a weak spot that needs to be guarded.

Second, up to now Einstein seems to be
embedded mainly in point solutions. What in this case is missing is a number of
engines. For example an engine that can power profiling and recommendations
across clouds. But one can think of a good number of intelligent helpers for
salespeople as well.

In general I’d expect some high profile
announcements around machine learning, bots and, hopefully, conversational
interfaces – ideally interactive voice interfaces. I didn’t hear much of Bob
Stutz in the past 1.5 years, and cannot imagine that he idled.

Maybe we are in for a surprise. So, lets
look forward to Dreamforce 2017.

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